All three forms produce financial statements the board can share with owners. The difference is how much work the CPA does to check the numbers, and how much assurance the CPA can give.
A compilation is the lightest. The CPA puts the association's financial information into financial statement form without testing it, and under the AICPA's compilation standard, AR-C 80, provides no assurance. A CPA who isn't independent of the association can still perform a compilation but must disclose that in the report.
A review adds analysis. The CPA runs analytical procedures, such as comparing this year's numbers to last year's and to the budget, and asks questions about anything that looks unusual. The review standard, AR-C 90, provides limited assurance, which is less than an audit, and requires the CPA to be independent.
An audit goes furthest. The auditor gathers evidence to support the numbers and then gives an opinion on whether the statements are free of material misstatement. Auditing standards describe this as reasonable assurance, "a high, but not absolute, level of assurance," and require auditor independence.
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Compilation |
Review |
Audit |
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What the CPA does |
The CPA presents the association's numbers as financial statements without testing them. |
The CPA runs analytical procedures and asks management questions. |
The auditor tests the numbers against supporting evidence. |
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Assurance to owners |
Owners get no assurance. |
Owners get limited assurance. |
Owners get reasonable assurance, which is high but not absolute. |
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Independence |
The CPA can lack independence but must disclose it. |
The CPA must be independent. |
The auditor must be independent. |
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Professional standard |
AR-C 80 governs it. |
AR-C 90 governs it. |
Generally accepted auditing standards (AU-C) govern it. |
There's a fourth service to know about so nobody mistakes it for the other three. In a preparation engagement under AR-C 70, a CPA prepares the statements without issuing a report, and each page states that no assurance is provided. It's a nonattest service, separate from the three engagements above.
Start with your governing documents. Bylaws and CC&Rs can set their own financial reporting requirements, and when they ask for more than state law does, the board follows the higher standard. California's review statute says this directly: its requirement applies unless the governing documents impose a stricter one.
Then check your state. Some states tie reporting requirements to revenue or assessments, some leave it to the board, and some say nothing at all. For HOAs, the rules stood as follows as of October 2026:
|
State |
What's required |
Threshold and deadline |
What owners can do |
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The board must provide an annual audit, review, or compilation. The board chooses which one unless the governing documents require a CPA audit. |
It applies at any size. The work must be complete within 180 days after fiscal year end. |
Owners can request a copy, which must be available within 30 days after the work is complete. |
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The association needs a review prepared by a licensee of the California Board of Accountancy. |
It applies when gross income is over $75,000. The review goes to members within 120 days after fiscal year end. |
Check your governing documents. |
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The law has no automatic requirement, but the board can order an audit or review. |
The board's choice has no threshold. |
Owners of one-third of the units can require a review, or an audit if revenue or expenses reach $250,000. |
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The required level rises with revenue, from a cash report to compiled, reviewed, and audited statements. |
Associations under $150,000 in revenue prepare a cash report. Compiled statements start at $150,000, reviewed at $300,000, and audited at $500,000 or 1,000 parcels. Members get the report, or notice that it's available, within 120 days after fiscal year end unless the bylaws set another date. |
If 20% of owners petition, the members vote on a higher level, which passes with a majority of all voting interests. A majority of voting interests present at a meeting can approve a lower level, but not in consecutive years. |
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The association needs an independent CPA review or audit, depending on its budget. |
An annual budget of $75,000 or more requires an annual review, and $150,000 or more requires an annual audit, which must be completed within 210 days after fiscal year end. Between $45,000 and $75,000, a review is due in the year before a reserve study. |
15% of voting members can require an audit by written request made within the 180 days before fiscal year end. |
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The association needs a review by an independent Oregon-licensed CPA. |
It applies when annual assessments are over $75,000. The review must be completed within 300 days after fiscal year end. |
60% of owners can opt out each year. At $75,000 or less, a majority petition can require a review in communities created on or after January 1, 2004, and in certain older ones. |
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The association needs an annual audit by a CPA, and the older and newer acts set different thresholds. |
HOAs under the older HOA act need an audit once assessments reach $50,000. Communities under the newer common interest act need an annual audit at any size. |
Under the older act, 67% of votes cast can waive the audit each year. Under the newer act, owners can waive it only below $100,000. |
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State law sets no audit or review requirement for HOAs. |
There's no threshold because there's no requirement. |
Owners can request the association's records. |
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The law doesn't mandate an audit. Associations provide an itemized accounting each year or an independent audit instead. |
Associations with 10 or fewer units or annual budgeted assessments of $100,000 or less are exempt from the act unless they opt in. |
Check your governing documents. |
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State law sets no audit or review requirement. |
There's no threshold because there's no requirement. |
Check your governing documents. |
Two of these rules changed recently, and older articles still carry the old numbers. Florida HOAs with at least 1,000 parcels must prepare audited financial statements, regardless of revenue. An association can't use the members' vote for a lower level of reporting in consecutive years. Both changes took effect July 1, 2024 under Florida's HB 1203.
Washington raised the line below which owners can waive the audit under its newer common interest act from $50,000 to $100,000, effective June 11, 2026, through SHB 2354. Nearly all Washington communities move under that act on January 1, 2028, when the older act's audit section expires.
Condo rules can differ, even in the same state. Texas, for example, has no HOA requirement but requires condominium associations to obtain an annual independent audit. If your community is a condo association, check the condo statute rather than the HOA one.
Treat the table as a starting point. Statutes change, and some smaller communities qualify for exemptions, so confirm your requirement with your association's attorney before the board votes on an engagement.
If neither your state nor your HOA's governing documents set a requirement, the 2014 Best Practices report on financial operations from the Community Associations Institute's Foundation for Community Association Research is a reasonable default. It states that "financial experts recommend that a CPA familiar with community associations perform an audit annually, minimally every other year."
In our view, an audit is worth the extra fee in any year the treasurer or the management company changes. That's when gaps in the records are easiest to catch and hardest to explain later.
The engagement letter is the contract that sets the level of service, the deadline, and the fee. Ask these questions before anyone signs it.
1. Which level do our governing documents and state law require, and are we near a threshold? Thresholds based on revenue move with your budget. A Florida HOA near the $300,000 line can move from compiled to reviewed statements in a single year.
2. How many community associations do you work with? HOA statements separate operating funds from reserve funds, and a CPA who does this work regularly knows what to look for. The CAI Foundation's best practices report also points boards to a CPA familiar with community associations.
3. Are you independent of our association and our management company? Independence is required for a review or an audit. Ask whether the firm does any other work for your management company.
4. Are you licensed where we need you to be? California requires a licensee of its Board of Accountancy for the review. Nevada and Oregon require a CPA licensed in those states.
5. What do you need from us, and by when? Ask for the full document request list up front. Then work backward from your state's deadline so the records arrive early.
6. Which pages does your opinion cover? Under auditing standard AU-C 730, the auditor doesn't opine on required supplementary information, and Nevada regulations place reserve disclosures in that section. Knowing the boundary keeps the board from overstating the report to owners.
7. Will you tell us in writing about weaknesses you find in how money is handled? Findings about approvals, check signers, and reconciliations give the board a list of fixes for next year.
8. What happens to the fee if records arrive late or incomplete? The answer shows how much your preparation is worth.
Every engagement depends on your financial records. A compilation needs fewer of them, and an audit needs the most, but the core set is the same. Here's what to pull together and why the CPA needs it:
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Record |
Why the CPA asks for it |
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Year-end financial statements from your accounting software, plus last year's CPA report |
It's the starting point and the baseline for this year's comparisons. |
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Bank and investment statements for the operating and reserve accounts, with reconciliations |
They show that the cash on the balance sheet exists. |
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General ledger and check register |
It's the full record of transactions the CPA samples from. |
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Budget-to-actual report |
Variances from budget are the first thing a reviewer asks about. |
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Vendor invoices, contracts, and purchase orders with approvals |
They support each expense and show who approved it. |
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Assessment roll and delinquency report |
They support assessment revenue and show what owners still owe. |
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Latest reserve study, reserve funding plan, and records of reserve transfers and spending |
They support reserve balances and the reserve disclosures. |
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Board meeting minutes |
They document approvals for major spending, reserve transfers, and special assessments. |
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Last year's tax return (Form 1120-H, or the applicable corporate return, such as Form 1120, if the association didn't elect 1120-H) |
It ties the statements to what the association filed with the IRS. |
Much of that list is what a board should already be reviewing. For example, California Civil Code 5500 requires HOA boards to review account reconciliations, budget-to-actual comparisons, bank statements, the check register, the general ledger, and delinquency reports every month. A board that keeps up with this all year can hand the CPA a clean file after year-end.
Keep these records long enough to answer questions later. Florida requires HOAs to keep official records for at least 7 years, and Texas requires associations with more than 14 lots to keep financial records for 7 years. Our guide to HOA records retention covers how long to keep each type of record.
If the records on the CPA's request list are spread across the accounting software, the treasurer's email, and files a past board member kept, collecting them can take up the first few weeks of the engagement. The year-end statements are one item on that list, and your accounting software still produces them. ManageHOA by BuildingLink includes accounting software integration for supported accounting systems and keeps the rest of the records trail in one place.
The document library holds the year-end statements, prior CPA reports, the reserve study, and board minutes in categories you define. Viewing permissions control who can see each document, so you can limit access to working files to board members instead of every owner. When the final report is ready, a user with management access can save it to the library and email owners a direct link to it.
Purchase orders, available as a ManageHOA add-on, keep the approval history attached to the spending. You can require approval before a purchase order goes to a vendor, with board members as approvers, or require approval before a vendor is paid, using approval groups with dollar limits.
Each purchase order carries the vendor and expense codes, can record the vendor's invoice number, and keeps its status history in an activity log. Closing a purchase order saves a permanent copy. When the auditor reviews an expense processed through a purchase order, the approval and invoice number can appear on the same record.
For reserve documentation, the equipment directory tracks the community's stationary equipment. The equipment replacement report then projects replacement dates and costs by year from each item's installation date, useful life, and replacement cost. The report exports to Excel, so the board can hand current numbers to the reserve study provider, who prepares the professional reserve study.
Our guide to mastering reserve studies covers how the study and the budget fit together.
If your fiscal year ends December 31, the deadlines arrive quickly. Florida HOAs have to deliver the year-end report, or notice that it's available, by the end of April unless their bylaws set another date. California's review must be sent to members within 120 days after fiscal year-end. Arizona's audit, review, or compilation must be complete within 180 days after fiscal year end.
Many CPA firms that serve associations book this work months ahead, and January through April is also tax season. Sign the engagement letter this fall, send the request list to whoever holds each record, and get the documents into one place before December 31. If your board wants one place for the documents, approvals, and reserve records your CPA will ask for, connect with a member of our team to see how ManageHOA by BuildingLink works.